What minimum wage can’t buy

An increase Friday in the federal minimum wage to $7.25 per hour comes in the midst of a heated debate over health care reform, and it highlights another problem with the existing health care system. While workers at all income levels have suffered declining rates of employer-sponsored health coverage, low-paid workers are particularly unlikely to get employer-sponsored health insurance.

A 2008 paper by EPI’s Director of Health Policy Research, Elise Gould, found that individuals in the bottom 20% of the household income scale were the least likely to have employer coverage: 21.9% of those households had health insurance, compared with 86.4% of people in the top 20% of household income. The paper, which tracked an overall decline in the portion of Americans under the age of 65 with employer-sponsored health insurance between 2000 and 2007, found the lowest rates of coverage occurred in the lowest-income households. Only about one-in-five individuals in households in the bottom 20% of the income scale had employer-provided health insurance.

While the 2008 paper tracked employer-sponsored coverage by household income, there is a similar pattern of low and declining rates of insurance among the lowest wage earners, such as those earning minimum wage, as the following chart shows:

Employer-sponsored health insurance for individuals under 65, by wage, 2000 and 2007

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EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.